Admin fund vs capital works fund in NSW strata

Every strata scheme in New South Wales must run its money through two separate funds: the administrative fund and the capital works fund. It is one of the most misunderstood parts of strata finance — and getting it wrong is one of the easiest ways for a volunteer treasurer to land the scheme in trouble. Here is what each fund is for, why they must stay apart, and the narrow rules for moving money between them.

Two funds, by law

Under the Strata Schemes Management Act 2015, an owners corporation must establish and maintain two funds: an administrative fund (section 73) and a capital works fund (section 74). Contributions collected from owners are paid into the relevant fund, and each fund can only be spent on what the Act allows. They are not interchangeable pots — they are two distinct accounts of the scheme’s money.

The administrative fund

The administrative fund is the scheme’s operating account — it covers the recurrent, day-to-day cost of running the building. Typical expenses include cleaning and gardening, common-area electricity and water, insurance premiums, strata management fees (if any), minor repairs and routine maintenance. If it is a predictable, regular running cost, it generally comes from the administrative fund.

The capital works fund

The capital works fund is for major, less-frequent expenditure on common property — the big-ticket items you save toward over years. Think repainting the building, replacing the roof membrane, upgrading the fire system, or resurfacing the car park. The fund exists so the money is already there when major work falls due, instead of hitting owners with a sudden special levy that can run into thousands of dollars per lot.

The 10-year plan behind it

The capital works fund is not guesswork. Section 80 requires the owners corporation to prepare and maintain a 10-year capital works plan that forecasts the major work coming up and what it will cost — and that plan drives how much you levy into the fund each year. From 1 April 2026, when a scheme reviews or replaces its plan it must use a new prescribed standard form. A realistic plan means fair, steady levies; a neglected one means nasty surprises.

Why the separation matters

Keeping the two funds genuinely separate is not box-ticking — it protects the scheme and the treasurer. Money saved for the roof should still be there when the roof fails; if it has quietly been spent on day-to-day bills, the scheme is exposed. Misallocating between funds is a common source of underfunding, cash-flow problems and owner disputes — and a treasurer who cannot show clean, separated records is the one who wears the questions at audit, AGM or handover.

Moving money between funds

Not freely. For schemes of more than two lots, section 76 lets the owners corporation temporarily use one fund to cover the other’s expense — but within three months it must decide at a general meeting whether to repay the fund it borrowed from, and where a fund is left short it may need a special levy to top it back up. In other words, the law tolerates a short, documented, repaid transfer — not quiet commingling. Two-lot schemes have their own concessions, including the ability in limited circumstances to resolve not to hold a capital works fund at all.

Which fund pays?

The Act sets the framework (sections 73 and 74) but does not publish a line-by-line list, so the test is the nature of the work — a recurrent running cost, or major capital expenditure?

• Cleaning, gardening, insurance, common-area power → administrative fund
• Repainting the building, a new roof, a fire-system upgrade, resurfacing the car park → capital works fund
• A genuinely minor, routine repair → administrative fund; a major replacement → capital works fund

Doing it the easy way with OneStrata

Keeping the funds apart is exactly what OneStrata is built around:

• One ledger, two funds, never mixed. Every transaction is tagged to the administrative or capital works fund, so the two never blur — the separation the law requires is enforced automatically, not left to a spreadsheet formula.
• Always-accurate balances. Because each fund’s income and spending is recorded as it happens, you can see exactly what is in each fund at any moment — no reconstructing it before the AGM.
• Reconcile against the bank. Match each fund’s movements to your bank statement line by line, so the books and the bank agree.
• An audit-proof trail. Every entry is captured in an immutable log — the clean, separated record that stands up at audit, AGM or treasurer handover.

The dual-fund rule is the single thing spreadsheets get wrong most often. OneStrata makes keeping the funds apart the default, not a discipline you have to remember.

Dual-fund checklist

• Confirm your scheme runs both an administrative and a capital works fund
• Keep the two funds separated in your records (and ideally your accounts)
• Pay recurrent running costs from the administrative fund
• Pay major common-property works from the capital works fund
• Maintain a current 10-year capital works plan (new standard form from 1 April 2026)
• If you borrow between funds, resolve repayment within three months
• Watch for deficits — clear them by special levy within the required time
• Reconcile each fund against the bank regularly

This guide is general information for NSW strata committees, not legal, financial or tax advice. The administrative and capital works funds, and the rules for using them, are set out in the Strata Schemes Management Act 2015 (sections 73, 74, 76, 79 and 80) and were affected by the 2025 strata reforms; always confirm the current requirements for your scheme with NSW Fair Trading (nsw.gov.au). OneStrata is record-keeping and management software for small to medium size strata schemes; it is not a licensed strata managing agent and never holds your funds.

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